Windows XP: When Hype Gets Too Hyper

It would be hard to find a hype machine more finely tuned than that of Microsoft Corp. For months, the hoopla surrounding its soon-to-be-released operating system, Windows XP, was building to a crescendo for the launch on Oct. 25. Microsoft planned a festival-like kickoff in New York's Times Square. And it planned to shell out $200 million to advertise Windows XP, with partners kicking in an additional $800 million. The tagline for the ads: "Prepare to fly."

No surprise that the ad campaign has been shelved in the wake of the Twin Towers attacks. Yet Microsoft is forging ahead with its scheduled Big Apple launch, albeit with the hype toned down. Indeed, the attacks have placed Microsoft in the awkward position of needing to push its most important product launch in years but doing so in a way that does not appear crass or insensitive. "You want to heed the message that President Bush is saying about getting back to business. But people have felt this tremendous loss," says Microsoft Marketing Vice-President Mich Matthews.

It's a marketing mind-bender that confronts not just Microsoft, of course. Across the country, companies of all stripes are attempting to delicately rejigger product launches and marketing strategies in a changed world. It's one in which the usual hard sells, irony-laden pitches, and even humor can appear to be in bad taste. Indeed, one of Microsoft's ads had PC users flying through buildings, which looked eerily similar to attack victims leaping to their deaths from the burning towers. The new ads will feature smiling PC users levitating a few feet off the ground to suggest the freedom and mobility that the earlier ads hoped to convey. And all references to the word flying are gone.

Moreover, Microsoft and the long-suffering PC industry will be hard-pressed to get consumers to pay attention. "How do they make people care? That's the biggest problem," says David Readerman, an analyst with San Francisco-based Thomas Weisel Partners who downgraded Microsoft shares on Sept. 24.

With the Times Square launch, Microsoft had hoped for an extravaganza that would rival its Windows 95 launch at its Redmond (Wash.) headquarters, which featured a giant tent, amusement park games, and Ferris wheel. But those plans were put on hold after Sept. 11. At first, it was unclear if New York wanted all the analysts, customers, and media hanging around. Now, the launch will proceed at the Marriott Marquis Theater as planned. But Microsoft is revisiting every piece of the event and is considering shelving its now-customary post-event concert.

Even so, XP isn't likely to provide the kick in the pants the PC industry so badly needs to spur consumer sales. Despite offering XP operating systems to customers a full month before the formal kickoff, PC makers say sales remain mired in a slump. And the increased likelihood of recession means corporate sales could also sputter. "It's going to basically twist in the wind for the next three quarters," says International Data Corp. analyst Roger Kay.

Microsoft's elimination of all reference to flying was surely the right thing to do. But the ill-fated ad campaign may not be the only thing that doesn't get off the ground.

By Jay Greene in Seattle

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